5 ways to give balky buyers a little nudge

Flashy buyer incentives like a new car parked in the driveway or a flat-panel TV might grab headlines, but when it comes to actually enticing someone to buy a home it's the more practical perks that count, real estate professionals say.

"Serious buyers are looking for a place to buy a home, not a trip to Tahiti," said Dave Ledebuhr, owner/broker of Musselman Realty in East Lansing, Mich.

Instead, effective incentives get to the heart of what's on the minds of potential buyers -- the overall cost of the home and the monthly payments they'll have to manage, he said.

Help in bringing down the interest rate of the mortgage for a year or two by paying points, for example, can go a long way in giving one home an advantage over another, said Dave Dalzell, owner/broker of Dalzell, Realtors in Abilene, Texas. Contributions to the down payment and common closing costs could especially be of help to a first-time home buyer, said Greg Zadel, owner of Zadel Realty in Firestone, Colo.

If sellers "put on their buyer's cap" and really consider what issues the buyer might have, it could make all the difference, Dalzell said.

But be aware that most seller concessions need to be disclosed in writing.

In addition, buyers and sellers must make sure they don't exceed the lender's allowable seller-paid assistance, Ledebuhr said.

Here are common incentives:

*Reducing the price

A price cut often is the one looked at first, said Delores Conway, director of the Casden Forecast at the University of Southern California's Lusk Center for Real Estate.

Gene Rivers, who owns four Keller Williams offices in Florida, agreed. If a buyer has in her mind that she'll pay $350,000 for a home and the seller won't budge from $375,000, "$5,000 in closing costs and a plasma TV won't get it done," he said.

*Paying points

Sellers can offer to pay mortgage points for a buyer. One point is 1 percent of the loan amount, charged as prepaid interest.

For example, instead of having an interest rate at, say, 6.5 percent, a seller might be able to pay points to push the rate to 4.5 percent for a year, Dalzell said.

A word of caution to buyers considering this tactic, however: This assistance usually spans about one to three years. Before accepting, plan for when the window closes and payments return to normal levels.

*Down-payment aid

For some buyers, the hardest part of entering the ranks of homeownership is the down payment. It's mostly first-time home buyers interested in this assistance because they're often the ones lacking in funds to complete a deal, Zadel said.

*Help with closing costs

Closing costs include items ranging from taxes to title insurance and can add up, ranging from 2 to 7 percent of the loan, according to Freddie Mac.

*Adding a warranty

A residential service contract is sometimes thrown in because it acts as insurance for a home's systems, often including plumbing, heating and cooling.

For a few hundred dollars, some agents consider it an inexpensive add-on that gives a buyer a little extra peace of mind, Dalzell said, during the first year in a house.

Those who accept a warranty should read the service contract and call the 1-800 number to ask questions, Dalzell said. If the seller pays for this add-on, he recommends having the buyer choose which company to use.